According to the contract specifications on the CME website, each contract will be $50. They will also be cash-settled and based on the reference rate from major cryptocurrency exchanges, including Bitstamp, Coinbase, and Kraken. Institutional investors will have to buy at least five contracts.
ETH futures started trading around $1,669.75. At press time, the spot price stands at slightly over $1,700, according to a chart from TradingView. The CME has traded more than 220 contracts so far, most of which will expire in February.
Supporting the Ethereum Bull Run?
The CME Group revealed its plans to introduce ETH futures for institutional clientele in mid-December. This was the first-ever US exchange to list these contracts, allowing traders to capitalize on volatility rarely seen in other markets these days.
The announcement seems to have contributed to the recent ETH rally, during which its price soared to a new all-time high (ATH) of $1,777. ETH currently trades just above $1,700, a 6% gain on the day. This is already a threefold increase since mid-December.
Despite varying opinions, many crypto traders are bullish on the launch. Among them is cryptocurrency researcher and investor Qiao Wang, who predicts that ETH will ultimately trade between $5,000 and $20,000.
Not Like Bitcoin
Derivatives are an important product for any digital asset. The Chicago Board Options Exchange (CBOE) was the first to release bitcoin futures in the US in 2017.
The CME followed suit, causing the BTC price to jump from $6,000 to $19,783 in the lead up to the launch. However, this also occurred on the same day that bitcoin reached its previous ATH ($20,000) and then crashed.
The ethereum surge appears similar to bitcoin’s spectacular performance. Some experts feel confident about its potential. Famous trader and analyst Alex Kruger rejected the suggestion that ETH would plummet, tweeting:
Wang shares this opinion, insisting that ethereum will more than likely remain bid.
“And LOL @ those who think CME futures will bring ETH into a 3-year bear market. This will be the worst trade of your life.”
Will the world’s first regulated ETH contracts attract more institutional demand? It’s unclear yet, but the year is still young.